# Prepare the journal entry to record the exchange under the assumption that a \$10,000 trade-in allowance was received and the balance was paid in cash.

1. On Feb 1 2019, ABC Co. traded in an old piece of equipment that originally cost \$64,000 with a salvage value of \$4000 and a useful life of 5 years for a new upgraded model that had a cash price of \$80,000. The company uses straight-line depreciation and the original equipment was purchased on Feb 1, 2015.
A) Prepare the journal entry to record the exchange under the assumption that a \$10,000 trade-in allowance was received and the balance was paid in cash. (B) Prepare the journal entry to record the exchange under the assumption that instead of a \$10,000 trade-in allowance, a \$15,000 trade-in allowance was received and the balance was paid in cash.

2. XYZ Co. Purchased a delivery van on January 1, 2000 for \$80,000. At the time of purchased it was estimated that the van would be used for 8 years with a \$20,000 trade-in value. On January 1, 2004 the company decided to revise the useful life to 10 years and revise the residual value to \$15,000. Using straight-line depreciation, determine the book value on January 1, 2004 and the revised depreciation for 2004.

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3. A, B, and C formed abc Consulting this year by making capital contributions of \$250,000, \$400,000, and \$150,000, respectively. They anticipate annual loss of \$200,000 and are considering the following alternative plans of sharing profits and losses:
I. In the ratio of their initial investments; or
II. Salary allowances of \$100,000 to A, \$90,000 to B, and \$50,000 to C and interest allowances of 15% on initial investments, with any remaining balance shared in the ratio of 3:2:1.
Required:
1. Use the schedule to show how a loss of \$200,000 would be distributed under each of the alternative plans being considered. (Round to the nearest dollar if needed.)

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